Friday, 9 November 2012

National Express Interim Management Statement

National Express Group PLC
National Express reports its Interim Management Statement for the
third quarter ended 30 September 2012 (the “third quarter”) and the nine
months ended 30 September 2012 (the “year-to-date”).

Overview
Overall, Group trading remains resilient, despite the increasing
challenges of austerity. Group profit is on target to meet the Board’s
expectations for the year.
Key developments in the third quarter have included:

Successful start-up to the new school year in North America school
bus, following a strong bid season and 97% contract retention;

Initial signs of a return to overall passenger volume growth in UK
Coach through fare promotion, to begin to offset the adverse impact of
the withdrawal of the government’s concessionary travel scheme; and

Continuing resilient performance in Spain, in the face of increased austerity pressure.s

Dean Finch, Group Chief Executive, commented:“We continue to deliver a robust performance, despite austerity
pressures on public and consumer budgets. We are focused on our fleet
investment, on driving greater cost efficiency and are relentless in our
focus on customer service. We are playing an active part in the current
review of the UK rail refranchising programme and are developing a
pipeline of opportunities across our portfolio in the US, Europe and
North Africa to drive medium-term growth.”UK Bus
The UK Bus business is performing well. Revenue and profit have
continued to grow, with commercial revenue up 3% year-to-date. Overall
ridership is stable, with positive results seen from the deployment of
over £30m of capital investment in 2012. Both labour costs and increased
concessionary fares have been secured under new medium term
arrangements.

UK Coach

This has been a difficult year for the UK Coach business. The
withdrawal of the government’s concessionary scheme has severely
affected the affordability of travel for our senior citizen passengers,
with a million fewer concessionary journeys expected in 2012. To offset
this, we have invested in our network, adding new routes and
frequencies, with non-concessionary revenue on the express coach
business up 1% year-to-date. With intense price competition on competing
rail journeys, we have discounted fares through the summer, driving
stronger non-concessionary volume growth, up 4% year-to-date and fully
offsetting the concessionary passenger shortfall for the first time in
September. Olympic-related contract work also benefitted the third
quarter; however, we expect the majority of the £15 million annual
concessionary income loss to impact profit in the current year.Rail
Our c2c rail franchise continues to lead the industry, winning Train
Operating Company of the Year at the National Transport Awards. Revenue
continued to grow, supported by a successful Olympic and Paralympic
Games, which saw c2c provide an extra 1.5 million seats. The franchise
has now set a new record for punctuality at 97.2%*. We had submitted a
strong bid to retain c2c from May 2013, prior to the overall
refranchising process being frozen by the Department for Transport on 3
October. Our Great Western bid is also ready for submission. We are
working with the Department on its current review and continue to
support the refranchising programme.
Our business development team is working on a pipeline of smaller
rail contract tenders in Germany, and is monitoring planned future rail
liberalisation in Spain.Financial Position and outlook
The Group’s financial position remains strong, with substantial
headroom under our debt facilities and a sound dividend policy. Fitch
Ratings recently reaffirmed its stable, investment grade rating of the
Group.
The Group has completed its fuel hedging programme for 2013, at an
average Brent oil equivalent price of $100/barrel (48 pence/litre,
compared to 43p for 2012). This will result in 2013 fuel costs
increasing by approximately £11 million year-on-year (UK Bus £3m, Spain
£4m, North America £4m).
Further analysis of the forthcoming IAS 19 pension accounting change
in 2013 has confirmed a limited adverse impact, of approximately £2
million to the UK Bus division earnings, with negligible effect on
operating profit in other divisions or on the Group interest charge.
The Group remains on track to deliver its profit expectations for
2012. The outlook for 2013 remains challenging with low economic growth,
government funding pressure and fuel cost inflation likely to constrain
progress. However, our developing pipeline of opportunities in new and
liberalising markets will present attractive avenues for growth. With
our proven management team, the diversity of our businesses and
continued growth in demand for high quality public transportation, we
have confidence in our long term prospects.

No comments:

Post a Comment

The Focus Transport website is intended to appeal to those that have a broad interest in public transport.

We cover topical news items and display high quality photographs relating to the current transport scene and also show archive material from slides and prints that are relevant to the subjects under review.

We publish in-depth articles about transport issues and welcome contributions from anyone who has suitable material.